Tuesday, May 25, 2010

Multi-generational Opportunities Abound, IF...

As a successful wealth manager, you know that it generally takes about the same time to manage a $500,000 account as a $2 million account (assuming you preach passive or semi-passive strategies). Does it take about the same amount of time to manage a $50,000 or $100k portfolio? Maybe so, maybe not.

So, then, would it be worth your effort to engage more low-value clients?

Combine lifetime value and multi-generational influence

If you look at the lifetime value of your clients (total fees divided by client numbers factored by years), even your lower-value clients look pretty good, eh? The emerging wealth sector can offer opportunities for your future prosperity as you patiently guide their accumulation of wealth (though within regs regarding compensation structure and client qualification).

Where do you find them? Surprisingly, the current "Y Generation" (up to about age 30) display attributes different than the "X Gen." While the X Geners chose paths specifically because it's not the way "dad did it" (think snowboarders, not skiers), Y Geners tend to be closer to their parents. They're not oppositional and know that they need to work hard like their parents. And (blessedly) they look to their parents as advisors and models.

Think "Mini-Family Office"

Where X Geners might specifically take their investment money to "anyone but who dad uses," the Y Geners may be more amenable to your working with them, too. While they may have some integrated tax and investment issues with their parents' investments, they are rising professionals in their own rights.

Recognizing that many rely on their employer-sponsored plans for the majority of their investments, working with the new generation, regardless of the current income it generates for you, is a good investment - a good lifetime investment.

But, a word of caution, these next gen opportunities deserve all the respect and service that you accord their parents (and your professional standards virtually require such). While they may be more amenable to an introduction from mom or dad, they will still do their research to make sure that your offering is good and they will demand the quality service that you are sure to provide.

Good luck with the "next gen" of income for your practice.

(Next issue: In light of the market, it's time to reinforce stability, consistency and confidence.)